TRANSCRIPT

MARGARET WARNER: Now: the second of two conversations with ideological opposites this election season.Last week, we talked with former House Majority Leader and conservative Dick Armey about his book on the Tea Party movement.Tonight: the perspective from the left and a book by Arianna Huffington.Gwen Ifill sat down with her last week.

GWEN IFILL: Arianna Huffington is co-founder and editor in chief of The Huffington Post and author of a new book, “Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.”She joins us now from New York.Welcome.

ARIANNA HUFFINGTON, co-founder, The Huffington Post:Thank you, Gwen.

GWEN IFILL: Arianna, I have to look at the cover of your book and I think to myself, America is still the world’s most prosperous nation.How do you define Third World?

ARIANNA HUFFINGTON: Well, I know it’s a jarring phrase, Gwen, but I chose it deliberately, because I felt that we needed a warning. We needed to sort of sound the alarm about the trajectory we’re on about the middle class crumbling.And the middle class is the foundation, not just of our democracy and our prosperity, but our political stability.

And so, as the middle class is — is crumbling, we really have a certain time, a window during which we can course-correct and turn things around.And I end the book on an optimistic note, that we can do that, but only if we bring a sense of urgency to the undertaking.

GWEN IFILL: You’re a political animal.When you say that the middle class is crumbling, what are the events that you would say led us to this point?

ARIANNA HUFFINGTON: Well, it has been going on for about 30 years.It didn’t just happen because of the financial meltdown.It’s been a combination of the kind of tricks and traps that we see in the mortgages that were offered, the credit card contracts that were offered, the assumption somehow that people could just buy into the American dream without any kind of down payment.

So, there’s a combination of a collective delusion about how we could put everything on our credit cards and use our houses as an ATM machine.And then suddenly, when the cards came tumbling down, we saw that, in fact, there were — there was nothing to fall back on.

And, as a result, we’re now seeing a country of extremes.You know, the income inequalities have been dramatic.You know, we went from CEOs making 30 times as much as their workers 40 years ago to them making 300 times as much now.As, as a result — that’s really the most troubling thing — people have this incredible sense of unfairness and injustice about what is happening.

GWEN IFILL: And, as a result, people are angry on the right and the left.But who does — whose responsibility is it to try to straighten this out, the folks who are in power, theoretically, at least for the moment, in Congress and at the White House on the left, or the people like the Tea Party conservatives who are agitating in the same way, using a lot of the same language you’re using, on the right?

ARIANNA HUFFINGTON: Well, in fact, I think that the solutions are beyond left and right, and I think we in the media have a responsibility to stop framing everything as a right-left issue, because this has been obviously a failure of the Bush years that put their faith in free market economics and deregulation, but also the Democrats during the Obama years, when they had control of the White House, the House, and the Senate, but, instead of going forward with bold proposals that would address the fundamental problems in the country, they tried to basically do what they can to bring everybody along, sort of flirt with Olympia Snowe, and bring Larry Summers to head the economic team in a way that put Wall Street ahead of Main Street.

And they lost very precious time.So, here we are, 20 months into the Obama administration, and, as Lloyd George put it, you cannot jump across a chasm in two leaps.And that’s what they tried to do with a stimulus bill that wasn’t adequate, without putting any strings to the kind of bailout that Wall Street received, which meant that they were bailed out, but they cut lending to small businesses, to the tune of $100 billion.And now the chickens are coming home to roost, both economically and politically, for the Democrats.

GWEN IFILL: The energy seems to be — at least the anger energy that you talk about seems to coalesce in — in the Tea Party movement that we talk about.So — so, I wonder whether you think that — Dick Armey, for instance, was on this program.

He says that the Tea Party movement is out to reform the Republican Party, not be the Republican Party.Would you say that people who are more liberal need to reform the Democratic Party, to do some of the things you just — you just outlined?

ARIANNA HUFFINGTON: I think we need to reform both the Democratic Party and our entire political system, which remains at the moment captured by special interests, you know, with 26 lobbyists for every one elected official.And we have seen that again and again.We have seen it when the special interests defeated cram-down legislation.So, the president this week spoke about hundreds of thousands of people losing their homes.That didn’t need to happen.

If we had had cram-down legislation, if the White House had pushed to make sure that there were loan modifications that were mandatory, a lot of that didn’t have to happen.That’s really why the anger is at the moment focused on the Democrats.They were in charge.And, unfortunately, that’s the — the problem with incumbency.

GWEN IFILL: It seems also that the Democrats are the focus of anger from Democrats and Republicans.Who will speak — who does or who should be speaking for the people who are actually in the jobs currently?

ARIANNA HUFFINGTON: Well, the president gave the best speech he has given since he’s been in the White House.It was a speech that — that had the kind of eloquence that we expected from him and that dealt with the real problems.The problem is, is it too late in terms of the midterms?It’s never too late in terms of his own presidency and in terms of 2012.

But the cards have been dealt for November.Obviously, whatever he does between now and then isn’t really fundamentally going to change the economy, the job numbers, or the foreclosure numbers.

GWEN IFILL: When you say the cards have been dealt for November, do you believe, then, Democrats will lose the House and the Senate?And if that’s the case — and even if it’s not — what does that bode for 2012, really?

ARIANNA HUFFINGTON: Well, at the moment, if the election were held today — and we know a lot can change between now and the election — they would lose the House.

The Senate is too hard to tell yet.But that is really, for me, largely a product of how they underestimated the economic crisis.Remember, Gwen, up until very recently, really up until the GDP numbers were recalculated, we were still talking about a recovery in much more glowing terms.

We were still talking about unemployment as a lagging indicator.Now the language has changed.The tone has changed.The White House itself has — is singing a very different tune, because it’s now clear there’s no fundamental recovery.There are improvements, but it’s all painfully slow, as the president himself acknowledged.

GWEN IFILL: And you believe they should be spending more money in order to overcome this, rather than thinking about ways of cutting the amount of money that’s going out the door, with the deficit in mind?

ARIANNA HUFFINGTON: You know, it’s not just more money.It’s not just more money.It’s really, we didn’t have the sense of urgency that we had about saving Wall Street, you know, the famous weekend when everybody came together, and they basically said, we cannot afford to let the financial system collapse.We throw everything against the wall and see what works.

We never did that.We never did things like a payroll tax holiday.The kind of credit, tax credits for R&D that the president is talking about now, why didn’t we propose this earlier?The kind of infrastructure spending that is desperately needed, that conservatives and Democrats can agree is needed, and that would keep jobs for sure here in this country, that wasn’t there.

Even though the president talked in the State of the Union that jobs were going to be his primary focus, we didn’t see that until we got two months before the midterm election.

GWEN IFILL: OK.Well, we will see what happens during those midterm elections.

Arianna Huffington, author of “Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream,” thanks so much for joining us.

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